Ford CMO Jim Farley: Social media leading to ‘massive cost savings’ for Ford

How cool is this? My friend Kaitlyn, who works for Ogilvy, wrangled some time with Ford CMO Jim Farley at the Paris Auto Show to answer a few questions about how the automaker uses social media. So she reached out to me and a few other people to see if we wanted to ask Jim a question. Of course I did, and Kaitlyn collected all the questions and then got Jim to answer them on video, and here it is:

Isn’t that awesome? My question to Jim was “Are there any areas that Ford can point to where social media has either lowered business costs, or improved existing processes?”

Here is Jim’s answer: “What happens is, by launching the vehicle early, getting people involved in talking about the new global Focus or the new Fiesta is the US before it goes on sale, we can lower the amount of traditional advertising we do after the vehicle goes on sale. That’s where the massive cost savings have been. I’ll give you an example; On the Fiesta Movement, we had higher unaided nameplate awareness than Fit or Yaris, and we spent 10 cents on the dollar, than a traditional tv ad campaign. So by starting earlier and using social media to spread the word about the new product, we’re really reducing the amount of traditional advertising we have to spend.”

This is something that I think often gets overlooked in the whole ‘how do we tell if social media is working?’ debate. There’s two ways that social media can ultimately help a business:

1 – Generate sales

2 – Lower business costs

As Jim explains above, social media is lowering the amount of money that Ford has to spend on traditional advertising. That’s money that can then be spent on product development, customer service, and other areas that improves the quality of the product, as well as customer satisfaction. Which ultimately…increases sales. So this is another example of social media working indirectly.

And thanks to Kaitlyn for setting this up, and thanks to Mr. Farley for answering our questions.

This is a classic example of a wonderful blogger outreach. Kaitlyn reached out to a small group of marketing and social media bloggers, with extremely targeted, exclusive and RELEVANT content (Hey marketing/social media blogger, want to ask Ford’s CMO a question about how Ford uses Social Media? Ummmm…..YES!!!!). I’ve been getting pitched by publicists and agencies and bloggers, etc, for 5 years now, and Kaitlyn is by far the best at what she does. She rarely pitches me, but when she does, it’s always a story or content that’s extremely relevant to my readership, and I jump all over it.

And since the outreach is so well-done, I want to promote it here to share it with you. Not just for the content itself (amazing takeaways from Jim on how Ford is utilizing social media, wasn’t it?), but I can also share what Kaitlyn did as an example of what a successful blogger outreach looks like. Kaitlyn had established relationships with everyone she pitched, she knew who they were, and what type of content they were interested in. That’s why she rocks.

Besides being a great example of blogger outreach done right, what else can your company learn from this? What Kaitlyn did here is she found a way to get Jim involved in creating social content. While it would be great if the top executives at a major company like Ford could devote time every day to interacting with customers directly via social media, it’s just not realistic. So Kaitlyn found a way to spend a few minutes with Jim, and get him to answer some questions via video. That content can then be placed on Ford’s YouTube Channel, or embedded in a blog post on a company blog, or more easily shared via social networks like Facebook and Twitter. The point is, Ford’s CMO might not have time today to get on Twitter and answer customer questions directly, but Ford and Kaitlyn found a way to get him involved in a capacity that makes sense for him.

Thanks again to Jim for answering our questions, and Kaitlyn for setting this up. BTW as an aside, if a company is using social media tools to engage with you, doesn’t that improve your perception of the company, at least on some small level? Granted, this video alone isn’t going to convince me to buy a Focus today, but as a result of Jim taking the time to answer my question, I now have a slightly better impression of the company, versus their competitors.

UPDATE: Scott Monty left a fabulous comment and I wanted to add it here so everyone could see it: “There’s no need for time to tell – we’ve already demonstrated that it worked for the Fiesta. We had a higher level of awareness for the subcompact than for vehicles we had in the market for 2-3 years; we collected over 125,000 hand-raisers who indicated they wanted to learn more when the car became available; and the conversion of reservations to sales was 10X higher than our traditional conversion rate.

All before we began any major media efforts toward the launch of the Fiesta.”

We’re very proud to have strong agency partners like Ogilvy 360, who work not as vendors, but as an extension to the Ford team. The approach they’re taking is one that we’ve developed together, and we trust them with our brand to do the good work they’re doing.

And let’s see you get involved with the Global Test Drive program, so you can have a chance to be convinced of buying that all-new Ford Focus!

Ah, Mr. Baskin, our perennial skeptic. Good to see you around these parts!

As you’re probably aware, the automotive sales process begins with awareness and perception, and that leads to purchase intent and then sales. We can’t expect to increase the latter two without the former two in place first. And we’ve done an admirable job of that over the last two years. But just so you’re not confused, we’ve also increased our market share in 22 of the last 23 months as well.

Take a look at our ONE Ford mission at http://www.ford.com/about-ford/company-information/one-ford. You’ll see that our goal is “An exciting viable Ford delivering profitable growth for all.” And profitable growth comes not only from sales, but also from cost reduction and restructuring our business.

So, no, considering sales as one measure is not stupid. But focusing *only* on sales is. Our business is much more complex than that.

Scott, thanks for the clarification. Having led public affairs for Nissan for a few years, I know very well that awareness must precede purchase intent and subsequent sales (it’s a truism of business, not just the car biz). I just don’t think your social media campaigns have much if any relevance to that process. But time will tell. And, while we can agree to disagree, I wish you and Ford the best. That goes for you too, Mack, even though I don’t think you’re anywhere near right…

Our social media campaigns don’t “have much if any relevance to that process.” Hmm. Actually, I can unequivocally say that you’re wrong.

There’s no need for time to tell – we’ve already demonstrated that it worked for the Fiesta. We had a higher level of awareness for the subcompact than for vehicles we had in the market for 2-3 years; we collected over 125,000 hand-raisers who indicated they wanted to learn more when the car became available; and the conversion of reservations to sales was 10X higher than our traditional conversion rate.

All before we began any major media efforts toward the launch of the Fiesta.

So you can claim irrelevance all you want, but the fact of the matter is our social media effort for the Fiesta was the *only* thing driving sales when we measured the results.

Mr. Baskin, how can you possibly believe that social media has had no impact on Ford’s awareness, and in lowering the overall marketing spend ay the same time? One spot during American Idol probably costs more than the entire Fiesta Movement campaign, and the results of that campaign were strong. Just about every key metric for awareness, purchase consideration, etc. are up. Granted, its not just social but how can you deny that its a big part of it?

Kyle, “awareness” isn’t an absolute good, and “exposure” isn’t the same thing as awareness anyway. Marketers have known these truths for generations, and they are as valid now as they were in the past. Most of the metrics you cite are squishy “what-if” measures that may or may not even have any connection to Ford’s social campaigns (the placement on American Idol certainly didn’t). Perhaps what I find most funny is that the Conventional Wisdom is to a priori presume that social media are important and then proactively go out to the marketplace to find proof of that belief. My gut tells me that it’ll be the old-fashioned, not-so-sexy traditional marketing content — and approaches — that’ll end up selling Fiestas. It won’t hurt that it’s a damn good-looking vehicle.

“Perhaps what I find most funny is that the Conventional Wisdom is to a priori presume that social media are important and then proactively go out to the marketplace to find proof of that belief. My gut tells me that it’ll be the old-fashioned, not-so-sexy traditional marketing content — and approaches — that’ll end up selling Fiestas.”

And there it is. My gut told me this was the motivation behind your comments.

Jonathan don’t worry, the ‘tried and true’ isn’t going anywhere. And neither is social media. Now if you don’t care for social media that’s fine, but when a company tells you that it’s seeing real sales and real cost reductions from utilizing social media, it’s a bit silly to blindly claim that they aren’t.

Scott and Mack, there’s nothing unequivocal in what you say, and I suspect that my vision (and hope) for the potential for social media reaches far beyond yours.

But I completely understand that one of the rules of online engagement is to always make sure you have ‘the last word,’ so I will defer to your mastery of the medium. These sort of conversations are always fun, so thank you!

(EDIT: Sorry Jonathan, you were given plenty of room to have your say here, but you’re not going to be allowed to insult everyone that attempted to engage you, then promote yourself on the way out the door. – Mack)

Mack, no insult intended. I thought we were playfully debating. I apologize, as I was simply trying to recognize the unequivocal fact that you’re not going to change your POV any more than I am. I certainly didn’t feel insulted by your repeated comments that I was wrong.

But thank you for helping me better understand this forum. I will make a point of avoiding it from this point forward.

Sorry Jonathan, but when your opening comment is “What glorious nonsense!”, you are signaling to everyone here that you aren’t interested in an open and healthy exchange. I tend to shutdown when I hear someone talk who has an obvious agenda.

My guess is you’ll get a similar reaction from most people, or you already have. A shame really, as I think the discussion of the potential vs limitations of social media is a fascinating debate, but one best suited to those that can approach the existence of both with an open mind.

Mr Baskin – I’m confused. Are you arguing that the use of social media for Ford’s Fiesta (and other brands) are irrelevant to the success of the business?

Crowdsourcing, engagement, conversation, debate are 4 key topics referenced in your book ad. I completely agree that these techniques are hardly new and look forward to reading more about this in your book, I also very much believe that recent social media technologies can be used to facilitate the Brand Consumer interactions that enrich the Customer experience and relationship with the business, which leads to a win-win for the Consumers and the Brands.

Dave, thanks for checking out my book outline. Crowdsourcing, engagement, conversation, and debate (and other social activities) aren’t necessarily marketing tools, but rather components of operational behavior. My point re Ford and many other businesses is that they miss the boat on what’s possible (and increasingly necessary) via social platforms. I’m a long-term fan, not a detractor.

Jonathan is not original. I’ve never heard his name, but I recognize the behavior. Trolling for attention by attacking the top when you’re on the fringe Is not new, it’s pathetic. It’s the lazy way out, when your arguement has no integrity.

The sad thing is, we’ve gotten totally sidetracked off of what could have been a fabulous discussion about Ford’s results via social media, and how other companies could improve their own efforts. I am partly to blame for that, so I apologize to everyone.

What did y’all think of Jim’s comments in the video and Scott’s here about Ford using social media to built awareness for a model prior to launch? And how that meant they didn’t have to invest in or as much in a traditional ad spend to support the model launch?

I think we sometimes get too focused on the ‘generate sales’ portion of how social media can benefit a company, and don’t spend enough time looking at how social media can also lower costs. The savings Ford enjoyed can then be re-invested in product design and development, which should ultimately lead to increased sales.

So by saving money, Ford could also increase sales. Best of both worlds, it seems!

The rest of the advertising industry already admits that “‘awareness’ isn’t an absolute good, and ‘exposure’ isn’t the same thing as awareness.’ ” (http://tinyurl.com/25hhssx) Or maybe ask the guy who birthed advertising itself? (http://tinyurl.com/46c88a)

Social media (and digital marketing) is NOT a better way to advertise. And cost-cutting is a marginal victory. The opportunity is to discover latent need, nurture it and capture demand. Period.

“Have you driven demand lately?”

Scott, why doesn’t Ford elevate its lead generation successes… rather than define success as, “it’s cheaper advertising?” And why would Ford not take recovered costs and invest in lead generation?

But here’s where it gets interesting: Most uses of social media is not linked to sales because it cannot be. It’s advertising. Designed to create intangibles — awareness, desire. Meanwhile, a multi-billion dollar lead generation industry uses digital to nurture and capture demand. Using direct response that, yes, relies on attention-getting devices.

Yes, they use attention-getting devices (ads) at the front end. But they use things like social media as **part of a system.**

A system that sell sales leads to Ford.

So why is Ford excited by the Web providing cheaper advertising? Why would anyone settle for that let alone tout it?

Middlemen are doing the heavy, database marketing-driven lifting on the Web. Companies that you’ve never heard of before are taking it to the bank. Why aren’t major advertisers like Ford presenting or even attending http://www.leadscon.com?

Absence from this lucrative, exploding realm is indicative of corporate lethargy. I’ll tell you where the jaw-dropping ‘best practices’ are. They’re here.

I think Ford needs to find ways to evangelize social media — but not at the expense of the real opportunity. The opportunity is to mesh social media with direct response lead generation devices. To shepherd customers — help guide them toward decisions that they’ve already demonstrated a willingness to make.

And, IMO, to prioritize above cost-cutting or “engagement” that may somehow, in some way, some day lead to sales.

“Social media (and digital marketing) is NOT a better way to advertise.”

Jeff the only two people that have tried to compare social media to any type of advertising are you and Jonathan. I get the distinct impression that you aren’t replying to what is actually being said, but to rather your own preconceived notions about social media.

Mack, You’re entitled to what you think, say and blog — and how you do so. But I wonder: Do you blog to meet people, learn and foster purposeful conversation? I can only assume this is your intention. You seem like a nice guy. So then why are you quoting my opinion and suggesting it’s out of context with your post’s content?

And if you disagree with what I offer why not just disagree rather than indirectly accuse me of some kind of subversive plot to derail the conversation?

If you think someone is wrong or misguided please consider picking a point and arguing it. Help me understand. I’m dying to know! Please consider validating people’s opinions — not diminishing them ad hominum style.

And if you delete this comment like you are doing selectively with Jonathan’s that’s just fine with me. But I was hoping to spend more time with you — learning from you, your audience and collaborating. So much so that I phoned Jonathan today and was planning on reaching out to you privately… to connect more intimately. Thanks for considering.

You’re right Mack. Nobody said that social media was a better way to advertise. They only said it’s tremendously cost-effective as compared to it. HUGE difference.

I’ve sullied your blog. And you’ve needlessly pissed off 2 people, one of whom writes the CMO column for Adage and is a globally recognized expert. We now return your blog to its regularly scheduled “conversation”.

Great article and yes, they are doing well for the upfront sales position. However, they fail in the customer service aspect. Trying to deal with a botched dealership/body shop service (Leif Johnson Ford) in Austin, Texas and could get no where with Ford Corporate because they are franchise owned. That is fine but they lost a loyal customer who would not have used their body shop had they not been loyal customers. Ford doesn’t care after the fact. My experience is here – http://pgm35.posterous.com/leif-johnson-ford-horrid-customer-service

Is the core premise that consumer online word-of-mouth is a more effective and cost-efficient “channel” for brand marketing than paid media? If so, it would be great to identify some performance data specifically around those assumptions.Not denying that the social activation was a tremendous success, but there is a lot of noise in the marketplace (great earned media through PR efforts around the car, the bail-out investment approach, and the novel marketing approach as three examples) that may cloud the performance story described above. Has any data been shared specific to the social conversions or perceptual changes due to the WOM?

With the economy’s doom and gloom, automaker like ford should find an alternative to generate sales and social media would definitely boost not only the traffic but also the orders. Ford has been a giant icon in the automotive industry but it’s just the fact that crisis is still hitting industries including the ones where they belonged. With the help of social media, they could easily dominate the market and gain thousands of sales with ford cars as well as ford parts. The CMO has a smart idea of doing such strategy, with this, people will not only have the idea about what’s happening in the automotive world but also they will be informed and be introduced to some updates they have made with the vehicles.

Allow me to jump into the fray here if I may… Not surprising Mr Baskin has an issue with scottmonty and social media for it seems Mr Baskin has a history of selective memory/posting when it comes to Social Media. Seems he wrote earlier in the year all about Febreeze and how they were so successful without using any social media… um, wrong. Read this and you’ll see what I mean… http://bit.ly/n0yjde